Which One of the Following Statements Is NOT Correct

question 22

Multiple Choice

Which one of the following statements is NOT correct?

• A) Objectivity requires that internal auditors have an independent mental attitude.
• B) Internal auditors should be independent of the activities they audit.
• C) The internal auditor should not be responsible for correcting deficiencies when ineffective or inefficient operations are found.
• D) It is acceptable for internal auditors to recommend changes in operations and to install and implement the operating systems, as long as they do not have the responsibility for operating them throughout the year.

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Definitions:

Phantom Profits

Profits recorded in the accounting books but not actually realized through cash transactions, potentially leading to a misleading financial condition.

FIFO Costing Assumption

A method used in accounting that assumes the first items of inventory purchased are the first ones sold.

Specific Identification Method

The specific identification method is an approach to inventory valuation that tracks the cost of individual items or groups of similar items.

Inventory Costing

The method of accounting that assigns costs to inventory, typically involving the calculation of costs of goods sold and ending inventory values.